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ED
OV
PR
AP
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IA
UV
ST
, Table of Contents
Solutions Manual for Engineering Economics: Financial Decision
Making for Engineers (6th Edition)
ST
Author: Niall M. Fraser
ISBN: 9780133405538
UV
Chapter 1: Engineering Decision Making
Chapter 2: Time Value of Money
Chapter 3: Cash Flow Analysis
IA
Chapter 4: Comparison Methods: Part 1
Chapter 5: Comparison Methods: Part 2
Chapter 6: Financial Accounting and Business Plans
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Chapter 7: Replacement Decisions
Chapter 8: Taxes
Chapter 9: Inflation
Chapter 10: Public Sector Decision Making
AP
Chapter 11: Project Management
Chapter 12: Dealing With Uncertainty and Risk
Chapter 13: Qualitative Considerations and Multiple Criteria
PR
OV
ED
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©MEDCONNOISSEUR
, CHAPTER 1
Solutions to Chapter-End Problems
ST
A. Key Concepts
When to Use Engineering Economics:
UV
1.1 (a) Yes - several quantifiable alternatives exist
(b) Yes - if quantifiable
(c) No - alternatives are not quantifiable
(d) No - since it mainly involves intangible qualifications of the candidate
(e) Yes - at least two alternatives are quantifiable
(f) Yes - with quantifiable costs and benefits
IA
(g) No - hard to quantify
(h) Yes - if the effect is quantifiable
(i) Yes - quantifiable
(j) No - benefits are hard to quantify
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(k) Yes - quantifiable
(l) Yes - if quantifiable
1.2 Five examples:
AP
1) Location of the business: renting vs. buying decision
2) Equipment: leasing vs. buying decision
3) Equipment: choosing one out of several alternatives; analysis of cost
savings
PR
4) Viability of the business: analysis of cash flow; ability to recover the
capital investment
5) Effect of the corporate tax rate
1.3 Whatever the description for the items listed, it should be clear that all
OV
engineering design is founded on controlling the costs incurred.
Ethics in Decision-Making:
1.4 There is no right or wrong answer to any of these questions. The student
should observe, however, that there often is a difference in how we should
ED
behave compared to how we do behave.
??
B. Applications
1
Copyright © 2016 Pearson Canada Inc.
, Chapter 1 - Engineering Decision Making
1.5 There is no right answer to which they should move into. However, they
probably will move into the duplex, on the grounds that emotion has a
more direct impact on our decisions than does logic.
1.6 (a) She should probably not buy the cheapest one. She cannot decide on
ST
price alone.
(b) If everything else is the same, one would expect Karen to buy the
cheapest one.
UV
1.7 Ciel can (1) invest time in making sure she has the best information about
all of the issues that will affect her future sales, and (2) do sensitivity
analysis in her financial calculations.
1.8 It is not clear that Trevor should sell out to Venture Corp. He will get more
IA
money that way, but it may be very important to him that his brainchild
continue to thrive. What Trevor has to decide is whether avoiding the
displeasure he gets from Venture Corp. closing down his company is
worth $1 000 000 to him. If it is, he should take the Investco offer, or if not,
?_
the Venture Corp. offer.
1.9 Possible uncertainties that associate with the new technology:
1) Is the new technology proven to be viable?
AP
2) Is the performance or quality that are expected from the technology
proven to be consistent?
3) Are there any “side effects”?
4) Is this technology going to stay, or will it be replaced quickly by an
alternative technology?
PR
5) What market share might Telekom gain?
Sensitivity analysis may be able to address the second and third issues by
considering a range of performance/quality/side effect issues. The first
and fourth issues, however, may be difficult to address by sensitivity
OV
analysis since there is no specific quantity that can be varied.
ED
C. More Challenging Problems:
1.10 The Toyota Corolla is the right choice when the interest rate is very high,
while the BMW is the right choice if the interest rate is very low.
??
2
Copyright © 2016 Pearson Canada Inc.
ED
OV
PR
AP
?_
IA
UV
ST
, Table of Contents
Solutions Manual for Engineering Economics: Financial Decision
Making for Engineers (6th Edition)
ST
Author: Niall M. Fraser
ISBN: 9780133405538
UV
Chapter 1: Engineering Decision Making
Chapter 2: Time Value of Money
Chapter 3: Cash Flow Analysis
IA
Chapter 4: Comparison Methods: Part 1
Chapter 5: Comparison Methods: Part 2
Chapter 6: Financial Accounting and Business Plans
?_
Chapter 7: Replacement Decisions
Chapter 8: Taxes
Chapter 9: Inflation
Chapter 10: Public Sector Decision Making
AP
Chapter 11: Project Management
Chapter 12: Dealing With Uncertainty and Risk
Chapter 13: Qualitative Considerations and Multiple Criteria
PR
OV
ED
??
©MEDCONNOISSEUR
, CHAPTER 1
Solutions to Chapter-End Problems
ST
A. Key Concepts
When to Use Engineering Economics:
UV
1.1 (a) Yes - several quantifiable alternatives exist
(b) Yes - if quantifiable
(c) No - alternatives are not quantifiable
(d) No - since it mainly involves intangible qualifications of the candidate
(e) Yes - at least two alternatives are quantifiable
(f) Yes - with quantifiable costs and benefits
IA
(g) No - hard to quantify
(h) Yes - if the effect is quantifiable
(i) Yes - quantifiable
(j) No - benefits are hard to quantify
?_
(k) Yes - quantifiable
(l) Yes - if quantifiable
1.2 Five examples:
AP
1) Location of the business: renting vs. buying decision
2) Equipment: leasing vs. buying decision
3) Equipment: choosing one out of several alternatives; analysis of cost
savings
PR
4) Viability of the business: analysis of cash flow; ability to recover the
capital investment
5) Effect of the corporate tax rate
1.3 Whatever the description for the items listed, it should be clear that all
OV
engineering design is founded on controlling the costs incurred.
Ethics in Decision-Making:
1.4 There is no right or wrong answer to any of these questions. The student
should observe, however, that there often is a difference in how we should
ED
behave compared to how we do behave.
??
B. Applications
1
Copyright © 2016 Pearson Canada Inc.
, Chapter 1 - Engineering Decision Making
1.5 There is no right answer to which they should move into. However, they
probably will move into the duplex, on the grounds that emotion has a
more direct impact on our decisions than does logic.
1.6 (a) She should probably not buy the cheapest one. She cannot decide on
ST
price alone.
(b) If everything else is the same, one would expect Karen to buy the
cheapest one.
UV
1.7 Ciel can (1) invest time in making sure she has the best information about
all of the issues that will affect her future sales, and (2) do sensitivity
analysis in her financial calculations.
1.8 It is not clear that Trevor should sell out to Venture Corp. He will get more
IA
money that way, but it may be very important to him that his brainchild
continue to thrive. What Trevor has to decide is whether avoiding the
displeasure he gets from Venture Corp. closing down his company is
worth $1 000 000 to him. If it is, he should take the Investco offer, or if not,
?_
the Venture Corp. offer.
1.9 Possible uncertainties that associate with the new technology:
1) Is the new technology proven to be viable?
AP
2) Is the performance or quality that are expected from the technology
proven to be consistent?
3) Are there any “side effects”?
4) Is this technology going to stay, or will it be replaced quickly by an
alternative technology?
PR
5) What market share might Telekom gain?
Sensitivity analysis may be able to address the second and third issues by
considering a range of performance/quality/side effect issues. The first
and fourth issues, however, may be difficult to address by sensitivity
OV
analysis since there is no specific quantity that can be varied.
ED
C. More Challenging Problems:
1.10 The Toyota Corolla is the right choice when the interest rate is very high,
while the BMW is the right choice if the interest rate is very low.
??
2
Copyright © 2016 Pearson Canada Inc.
